Earnings rise for Edison's top-paid workers

The highest-paid 15 percent of Southern California Edison employees received at least $498.1 million in combined pay and benefits last year, and charged at least $10.9 million to their expense accounts, according to a report the utility filed with the state Public Utilities Commission.

The total number of employees who earned more than $125,000 in annual base salary in 2012 increased about 5 percent over the year before, and combined total compensation increased about 14 percent, according to the Watchdog's analysis of SCE's reports for 2011 and 2012.

Breaking it down

Of the 15 percent, or about 2,390 employees at SCE and its parent company, Edison International:

•47 earned more than $250,000 in annual base salary in 2012, collecting about $65 million in combined total compensation (which includes pay and benefits), according to the report. They charged about $1.7 million to their expense accounts. Ratepayers funded "less than half" of the group's combined total compensation, according to the report.

•2,067 earned from $125,000 to $249,999 in annual base salary, collecting about $380.3 million in combined total compensation. They charged a combined $8.7 million to their expense accounts. Two of them charged more than $100,000 in business expenses. Edison officials said the big business expense bills reflected charges for public outreach and corporate entertainment events, and the expenses – like all expenses charged by utility employees – were divided between ratepayers or investors based on the type of business activity involved.

Departures rising

Most of the change in annual compensation for the 15 percent appeared centered in a group of employees who left their jobs or took a leave of absence, according to data from the reports.

At least 275 employees who earned at least $125,000 in annual base salary retired, were "terminated," died, or took a leave of absence last year – a figure that rose by about 85 percent over 2011. They earned a combined $52.8 million in total compensation and charged a combined $527,427 to their expense accounts.

The increase in employees who left their jobs last year was the result of an ongoing companywide organizational review to align staffing with industry benchmarks and reduce layers of management, said Jennifer Manfre, a spokeswoman for SCE. The increase also reflects planned staff reductions that took place last year at the San Onofre Nuclear Generating Station, Manfre said.

Forty-five employees in the group had a job title that included the word "nuclear," according to the report. They accounted for about 16 percent of the total. In 2011, eight workers in the group had job titles that included the word "nuclear," and they accounted for about 5 percent of the total.

Five employees who left their jobs or took a leave of absence in 2012 earned more than $1 million in total compensation, compared with zero the year before, according to the reports.

The number of employees who earned more than $250,000 in annual base salary also increased significantly in 2012 over the previous year, the report showed. The number of employees climbed from 32 in 2011 to 47 last year – a 47 percent increase.

Twenty-one employees in the group earned more than $1 million in total compensation last year, up from 16 in 2011, according to the reports.

About 20 percent of these 47 employees' combined total compensation in 2012 came from performance bonuses – compared with 15 percent the year before, according to the Watchdog's analysis. Ratepayers funded between 50 percent and 90 percent of "short-term incentives," such as bonuses, depending on the employee, according to SCE's report.

Bigger bonuses

The CPUC authorized SCE to spend about $147 million in "short-term incentives" or bonuses in 2012, and to collect 90 percent of it from ratepayers. When the CPUC set SCE's rates in 2009, SCE was authorized to spend $106 million on short-term incentives and bill ratepayers for all of it.

The CPUC decided to limit the amount of ratepayer money that could be used for bonuses in 2012, because of concern about the rising cost and uneven distribution of awards in favor of executives, according to CPUC documents.

CPUC officials noted that, in 2009, almost a third of the bonus awards went to a group of managers that made up about 9 percent of the workforce, according to CPUC records. An additional 8 percent went to non-officer executives who made up less than 1 percent of workers.

"Ratepayers may not be well-served by a bonus plan weighted heavily against the employees most likely to perform day-to-day operations and to interact with customers," CPUC officials noted in their decisions to set SCE's rate in 2012.

Highest paid

The highest-compensated SCE executive in 2012 was the utility's president, Ronald L. Litzinger. Litzinger received $3,118,158 in total compensation last year, according to the report. Included in his total compensation was a $560,705 performance bonus. The bonus was nearly equal to his $560,705 annual base pay.

Litzinger charged $95,916 to his expense account, according to the report. In 2011, he charged $73,154.

The second-most highly compensated executive who worked only for SCE was Peter Thomas Dietrich, the utility's senior vice president and chief nuclear officer. Dietrich, who was hired in 2010, received $1,697,416 in total compensation last year, according to the report. Included in his total compensation was a $522,520 performance bonus. The bonus was 13 percent more than his base salary of $460,475.

The report showed Dietrich charged $75,904 to his expense account. In 2011, he charged $89,624.

Manfre said Dietrich's target direct compensation for 2012 was more than 10 percent below the market median for top nuclear officers in the U.S., based on surveys by two executive compensation consulting firms.

Dietrich oversaw operations at the company's troubled San Onofre Nuclear Generating Station, which went offline in January 2012 after officials discovered a small radiation leak and then, later, unexpected wear in steam generator tubes. The plant's twin reactors stayed offline for 16 months as utility officials tried without success to win regulatory approval to restart the reactors at reduced power.

After spending more than $500 million on power to replace the plant's output during the shutdown, SCE officials announced June 8 that they would close the plant permanently. Litzinger said SCE expected to eventually reduce the plant's workforce from 1,500 workers to 400.

Regulators attributed the leak and wear in metal tubes to design flaws of steam generators that were almost completely installed by the time Dietrich took his post as chief nuclear officer.

Mindy Spatt, spokeswoman for ratepayer-advocacy group TURN, said Dietrich's bonus amounted to a reward in a year marked by failure at San Onofre.

"Most of us would expect to be reprimanded, not rewarded, if we spearheaded a debacle like SONGS," Spatt said.

Manfre said investors – not ratepayers – paid for Dietrich's performance bonus, which he earned through dedicated service facing down enormous challenges at San Onofre last year.

The Watchdog could not verify the source of funding for Dietrich's performance bonus.

"During this challenging time, he motivated them (the plant's workers) to maintain the highest standards of public and employee safety and meet the many technical and regulatory requirements," Manfre said. "He had to make very difficult decisions, and he made tremendous personal sacrifices, including a significant amount of time away from his family."